Is there harm with being diagnosed bipolar and subsequently being prescribed medications used to treat that?

I see lots of what I would call "iffy" diagnoses. A prime example is a young man I just saw at the ER last night. He presented with a diagnosis of bipolar, major depressive disorder, psychotic disorder, PTSD. I also had a client yesterday that presented with bipolar disorder based on anxiety, difficult sleeping, loss of temper, difficulty controlling anger, some low level depression. Both of these clients had life circumstances and/or childhood abuse experiences that could account for the symptoms. In the first one, I would agree with the PTSD, but the combination of bipolar, depression and psychotic disorder to me seems iffy, I would probably have diagnosed him with depressive disorder with psychotic features, and definitely PTSD. The second one I would have considered an anxiety disorder with perhaps episodes of dysthymia related to his relationship difficulties.

Is there some objective testing that we should be using? so many clients seem to be diagnosed with whatever the assessor's favorite diagnosis is, or possibly whatever is most readily medicated (or, and I hate to think this of anyone but I know it does happen, whatever promotion the doctor has gotten from the pharmaceutical company to prescribe their medication)

I just think there is too much medicating going on , and often for the wrong diagnosis.